US economy suffers worst decline as GDP contracts by 32.9% in the second quarter

[fiulpro]

I don’t think anyone here will be surprised to read this that the US GDP has contracted by 32.9% in the second quarter, as we all know that this is the after effect of covid19, but what worries me is whether the US economy can actually bounce back this year, or even next year as Trump had claimed that the economy will definitely bounce back. Further in more worrying news the jobless claims has risen to 1.43 million people, and this figure doesn’t look good for the US economy in the long run. Lastly with Covid19 yet wrecking havoc on US economy what chances do you see of its recovery in light of these numbers?.

Sources:

https://www.independent.co.uk/news/world/americas/us-economy-gdp-latest-coronavirus-trump-pandemic-a9645881.html

https://www.wsj.com/articles/us-economy-gdp-report-second-quarter-coronavirus-11596061406

https://www.forbes.com/sites/simonconstable/2020/05/28/look-out-democrats-the-economy-is-looking-better-for--trump-than-you-think/#3f1516e839bc

If you do think that whatever claims are made by Trump is really going to play out , I do think you might be horribly wrong. Unfortunately there is one thing we have to understand:

US Printed more money in a month as compared to two centuries

Plus now they are arranging for another stimulus bill. I do think this is a way to make sure people stay quiet when they see their economy declining.

GDP was supposed to decline , people don't have jobs , without jobs the whole system will shut down sooner or later BUT !

Good news is that more jobs are opening up and people are getting back on the track

But , I do think it will take a lot of time.
Then there comes the vaccination , whichever country makes the vaccination first wins the battle.

_*_

I do think right now India and UK have a tough battle going on with the vaccination thing.

I don't see US picking up anytime soon.
For the time being expect another 2 years for the economic situation to be good enough .

[figmentofmyass]

i would be happier with an actual free market---free of government interference; everyone stands on their own two feet. let the chips fall where they may. i don't need the fed to pump bitcoin, either.

I don't think it is possible in the way you mean it

And I'm not sure either that you would be honestly happier with a genuinely free, anarchic market. Without government oversight (interference, as you call it), we would see an endless stream of scams like Mt. Gox, Cryptsy, BTC-e, to name but just a few. Put simply, it will be very far from "everyone standing on their own two feet".

you're just advocating for a nanny state. i'm quite capable of minimizing my exposure to risky third parties and scams, thank you very much.

if you haven't figured it out by now, regulations are always crafted and enforced in a way that consolidates industry for the big players and reduces competition. as a consumer, and a savvy one at that, i surely come out the loser as a result.

the selective bailouts just exasperate the economic divisions in society. by perpetually giving handouts and subsidies to corporations and people who aren't poor and refusing to ever let the markets organically crash, they are destroying all notions of upward mobility and meritocracy. at the risk of sounding like a pinko commie, this is all pretty clearly designed to entrench existing capital and property owners at the expense of everyone else

Meritocracy is over-hyped.

what's a better alternative?

In fact, I'm not in the least surprised to see the term actively used as a handy euphemism for nepotism

meritocracy is basically the exact opposite of nepotism.....

[deisik]

i would be happier with an actual free market---free of government interference; everyone stands on their own two feet. let the chips fall where they may. i don't need the fed to pump bitcoin, either.

I don't think it is possible in the way you mean it

And I'm not sure either that you would be honestly happier with a genuinely free, anarchic market. Without government oversight (interference, as you call it), we would see an endless stream of scams like Mt. Gox, Cryptsy, BTC-e, to name but just a few. Put simply, it will be very far from "everyone standing on their own two feet".

you're just advocating for a nanny state. i'm quite capable of minimizing my exposure to risky third parties and scams, thank you very much

You can't be all-around savvy. Put shortly, there is always a place for a nanny state in your heart (whether you like it or not)

the selective bailouts just exasperate the economic divisions in society. by perpetually giving handouts and subsidies to corporations and people who aren't poor and refusing to ever let the markets organically crash, they are destroying all notions of upward mobility and meritocracy. at the risk of sounding like a pinko commie, this is all pretty clearly designed to entrench existing capital and property owners at the expense of everyone else

Meritocracy is over-hyped.

what's a better alternative?

It is not that meritocracy is bad. The problem with it is that you can't implement it in practice. To do that, you would need an external power (God) that would be able to judge everyone impartially and enforce its judgement upon everyone else. In other words, it is a fantasy, a figment of your ass

In fact, I'm not in the least surprised to see the term actively used as a handy euphemism for nepotism

meritocracy is basically the exact opposite of nepotism.....

That's why it makes such a nice euphemism. You know, war is peace, freedom is slavery, etc

[figmentofmyass]

you're just advocating for a nanny state. i'm quite capable of minimizing my exposure to risky third parties and scams, thank you very much

You can't be all-around savvy.

not the point.

the value i lose as a consumer from nanny state regulation outweighs the value i gain from being "protected" from third party risk. i resent losing value because other people are too stupid and careless to gauge risk. caveat emptor.

It is not that meritocracy is bad. The problem with it is that you can't implement it in practice.

if you're saying we're stuck with nepotism, fine. if you're saying that's the ideal we should strive for, i disagree.

[deisik]

the value i lose as a consumer from nanny state regulation outweighs the value i gain from being "protected" from third party risk. i resent losing value because other people are too stupid and careless to gauge risk. caveat emptor.

You actually don't know that, caveat emptor or otherwise

There are things which you take as granted, even the very fact that you can be a buyer and considered such (more specifically, as possessing a certain set of rights), but you might not see that it is made possible because of the nanny state somewhere down the line. In other words, you only see the tip of the iceberg and arrive at an erroneous conclusion that you lose more with a nanny state than without. Without, you wouldn't even be a consumer in the first place

if you're saying that's the ideal we should strive for, i disagree.

I just point out that meritocracy is only, well, a dream. And a dangerous dream at that, in the sense of idealistically trying to achieve it and realistically achieving probably the worst form of nepotism instead, thoroughly disguised as meritocracy (arguably the worst part of it)

[stompix]

Why EU is not suffering like USA from this virus?

Because we did it far worse than the US, Belgium, UK, Italy, Spain have a higher death rate per 1k/population than the US.
If we count based on cases, the EU is even worse
US has 4,862,513 cases with 158,968 deaths.
EU has ~3 million with 190 000 deaths.

The difference comes from the way the economy was affected during the lockdown, the US is more consumption inclined than Germany for example, and thus the effect was immediate and far more serious, for the economies than rely on exports and manufacturing the toll is yet to come in full force and a 10% GDP drop is not anything to brag about it. Italy dropped 12.4%, Germany 10.5 %and Spain 18.5%, yet both Italy and Spain were affected almost the same in terms of deaths and cases while Germany went almost unscratched but it still suffered.
And while Japan is almost a model of combating the virus they went also down by 26.3%.

We will have to wait till 2021 to see all the effects of the lockdowns.

Australia/New Zealand had a strong economy even before the pandemic. And with the mining industry in good condition, Australia has nothing to worry.

The mining industry needs consumers to buy the products made from what you mine if the economies of the other go down there will be a slump in demand and Australia will join the fate of OPEC countries. Just because you make stuff it doesn't mean you will also be able to sell it at a profit.

[Cnut237]

we did it far worse than the US, Belgium, UK, Italy, Spain have a higher death rate per 1k/population than the US.
If we count based on cases, the EU is even worse
US has 4,862,513 cases with 158,968 deaths.
EU has ~3 million with 190 000 deaths.

It's difficult to determine objective truth in both number of cases of CV19 and number of deaths from CV19. Most countries I suspect are trying very hard to ensure they look as good as possible when compared against other countries, and will be adjusting their figures through careful control of who they test and when they test them. And it depends on your metric of comparison, too. 'Number of cases' is hugely variable depending on the extent of testing, and whether it's blanket testing or just people with symptoms. As for 'deaths from CV19' - you can well imagine countries trying very hard to ascribe other reason for death where possible.
Perhaps the best commonly-used figure we can use is excess mortality against the 5 year average, on the basis that whilst governments find it fairly easy to control official 'reason' for death, they find it much more difficult to hide the fact of the death itself.

[South Park]

I don’t think anyone here will be surprised to read this that the US GDP has contracted by 32.9% in the second quarter, as we all know that this is the after effect of covid19, but what worries me is whether the US economy can actually bounce back this year, or even next year as Trump had claimed that the economy will definitely bounce back. Further in more worrying news the jobless claims has risen to 1.43 million people, and this figure doesn’t look good for the US economy in the long run. Lastly with Covid19 yet wrecking havoc on US economy what chances do you see of its recovery in light of these numbers?.

Sources:

https://www.independent.co.uk/news/world/americas/us-economy-gdp-latest-coronavirus-trump-pandemic-a9645881.html

https://www.wsj.com/articles/us-economy-gdp-report-second-quarter-coronavirus-11596061406

https://www.forbes.com/sites/simonconstable/2020/05/28/look-out-democrats-the-economy-is-looking-better-for--trump-than-you-think/#3f1516e839bc

If I remember correctly this crisis has erased the progress made by the US economy of the last 5 years so it is not realistic to expect that everything will be recovered during this or next year, the effects of the pandemic will be felt for years and the worst thing is that this is not over it is possible that the behaviour of people will change and their spending habits change with them and in an economy so dependent on the consumer this could spell doom for many industries during the short and long term.

[Sanugarid]

we did it far worse than the US, Belgium, UK, Italy, Spain have a higher death rate per 1k/population than the US.
If we count based on cases, the EU is even worse
US has 4,862,513 cases with 158,968 deaths.
EU has ~3 million with 190 000 deaths.

It's difficult to determine objective truth in both number of cases of CV19 and number of deaths from CV19. Most countries I suspect are trying very hard to ensure they look as good as possible when compared against other countries, and will be adjusting their figures through careful control of who they test and when they test them.

Well every country that has an active case of covid is trying their very hard to eliminate the virus, to dissolve and to find a vaccine on it, all of us are trying all of medical personnel are doing their job 100% in every sector and comparison these days are unnecessary. We are all hit with this, we should be coordinating to everyone besides the number of covid cases aren't final I'm sure there are people who has the symptoms but is just neglecting to visit a doctor coz they know that hospitals during this time is full of patient. We can't just be announcing anything if we are not testing everyone, who could have known that Europe has a higher cases than US only because not every one is put on the tests.

And it depends on your metric of comparison, too. 'Number of cases' is hugely variable depending on the extent of testing, and whether it's blanket testing or just people with symptoms. As for 'deaths from CV19' - you can well imagine countries trying very hard to ascribe other reason for death where possible.

This is what I'm talking about, so we can't expect that the number of cases is going down or slow down, the more people we tests the more we are going to get results and most likely most of us are just asymptomatic one, which I think is not belong or counted as a active case.

[Cnut237]

And it depends on your metric of comparison, too. 'Number of cases' is hugely variable depending on the extent of testing, and whether it's blanket testing or just people with symptoms. As for 'deaths from CV19' - you can well imagine countries trying very hard to ascribe other reason for death where possible.

This is what I'm talking about, so we can't expect that the number of cases is going down or slow down, the more people we tests the more we are going to get results and most likely most of us are just asymptomatic one, which I think is not belong or counted as a active case.

Indeed. If governments were interested primarily in the welfare of all of their citizens, then the world would be a very different place. Imagine if all data reported was unbiased truth, and not manipulated or carefully selected.  If everyone was working together, and scrupulously honest, then China would have alerted the world as soon as the first cases started arising in humans... and the rest of the world, instead of staying open and gambling with their people's health in order to not suffer some short-term economic damage, instead decided to quarantine all new entrants... the virus would never have spread.

But we are where we are. Perhaps lessons will be learned and countries will start acting with a bit more maturity from now on. Or perhaps not. At the least, we can hope that certain safeguards will be put in place to stop the same sort of thing happening again, the next time some deadly virus passes to humans.

[LogitechMouse]

whether the US economy can actually bounce back this year, or even next year as Trump had claimed that the economy will definitely bounce back.

Both the bold text and the not bold texts have different meaning.
For sure their economy will not recover this year since their Fed Chairman said already in an interview that it will take time for their economy to be back on its track. On the other hand, yes Trump has claimed that their economy will bounce back and yes it will like most of the economies but it will take time for it to happen.

Further in more worrying news the jobless claims has risen to 1.43 million people, and this figure doesn’t look good for the US economy in the long run. Lastly with Covid19 yet wrecking havoc on US economy what chances do you see of its recovery in light of these numbers?.

With the trend of the cases in US showing no signs of a reversal, its expected that unemployed people there are slowly rising even though there are some establishments that have re-opened. There are still some establishments who are closed permanently or temporarily.

The only chance that I'm seeing and all of us are seeing right now are a vaccine/cure. This is the only hope that I'm seeing right now in order for this virus to be controlled.

[stompix]

~

It's difficult to determine objective truth in both number of cases of CV19 and number of deaths from CV19. Most countries I suspect are trying very hard to ensure they look as good as possible when compared against other countries, and will be adjusting their figures through careful control of who they test and when they test them. And it depends on your metric of comparison, too. 'Number of cases' is hugely variable depending on the extent of testing, and whether it's blanket testing or just people with symptoms. As for 'deaths from CV19' - you can well imagine countries trying very hard to ascribe other reason for death where possible.

That's why I compared western countries and not countries that are known for their propaganda or countries which have no resources to even find out the impact of the disease. For example RSA and Egypt are leading the pack in Africa with over 150 deaths/mil in case of South Africa, but that's because they have the means to test and identify, How could a country next to it like Botswana have a death rate of 0.8, 200 times lower?

The western part of EU and the US are near matches, both in cases of testing per million, they have the financial resources, it's pretty hard to cover-up deaths that's why you can compare them, once you chose countries at random like Angola and Mongolia it's pretty obvious there are way too many variables to make it an effective comparison.

Perhaps the best commonly-used figure we can use is excess mortality against the 5 year average, on the basis that whilst governments find it fairly easy to control official 'reason' for death, they find it much more difficult to hide the fact of the death itself.

https://www.economist.com/graphic-detail/2020/07/15/tracking-covid-19-excess-deaths-across-countries
You can see that the excess reflects a bit the static on deaths, the US is a bit better than France Italy, or Spain but worse than Germany or Denmark.

But the number of deaths will not reflect equally in the economy, and this is why the US although might get out of this far better in terms of victims will end up worse short term economically. Long term I expect the EU to suffer a longer period.

Well every country that has an active case of covid is trying their very hard to eliminate the virus, to dissolve and to find a vaccine on it, all of us are trying all of medical personnel are doing their job 100% in every sector and comparison these days are unnecessary.

Not really, there are a few exceptions, one example is Turkmenistan where because of their all mighty and powerful and corrupt leader there is no case! 
And there are lot more where wannabe dictators are not doing anything because if you don't test you don't have people suffering or dying from it and it means you're a brilliant leader!

[jaysabi]

I don’t think anyone here will be surprised to read this that the US GDP has contracted by 32.9% in the second quarter, as we all know that this is the after effect of covid19, but what worries me is whether the US economy can actually bounce back this year, or even next year as Trump had claimed that the economy will definitely bounce back. Further in more worrying news the jobless claims has risen to 1.43 million people, and this figure doesn’t look good for the US economy in the long run. Lastly with Covid19 yet wrecking havoc on US economy what chances do you see of its recovery in light of these numbers?.

Sources:

https://www.independent.co.uk/news/world/americas/us-economy-gdp-latest-coronavirus-trump-pandemic-a9645881.html

https://www.wsj.com/articles/us-economy-gdp-report-second-quarter-coronavirus-11596061406

https://www.forbes.com/sites/simonconstable/2020/05/28/look-out-democrats-the-economy-is-looking-better-for--trump-than-you-think/#3f1516e839bc

Just be weary n the third and fourth quarter when the economy posts the largest quarterly GDP increase in recorded history.  I imagine such a headline would get considerable touting by the current administration despite the fact that it will completely lack all the context of how bad things were and still are.  There will be no quick recovery from this, and it will take years to get back to where we were economically before the pandemic hit, assuming we can even get back there at all.

[The Sceptical Chymist]

WOW.  32.9% is no joke, and that's scary to me. 

What I'm hoping is that these numbers temporarily reflect the consequence of the COVID-19 shutdown and that the contraction eases in the upcoming quarters as people start getting back to work.  I also do think that's going to be the case, because I'm seeing my local stores and restaurants reopening--the odd thing is that I'm not seeing a lot of people around in the stores and such.  I'm assuming that might be because people are getting stuff delivered from Amazon and the like. 

So that's the US.  I'm curious as to how the rest of the world is faring in terms of their economies. 

There are still some establishments who are closed permanently or temporarily.

That's true, although I haven't seen many in my area that have closed up shop for good.  But keep in mind that I don't own a car and I generally don't travel too far from home.

[suchmoon]

But the number of deaths will not reflect equally in the economy, and this is why the US although might get out of this far better in terms of victims will end up worse short term economically. Long term I expect the EU to suffer a longer period.

There is one serious advantage the US has against the more socialistically-inclined countries - it does this boom-bust cycle every 10 years, give or take. The economy is fairly well-equipped to take a hit and recover. I'm not a big fan of the government meddling in the economy like they did back in 2008 and are trying to do now, but in the grand scheme of things the recovery will be lead by people who know they have to go and take care of their own shit instead of waiting for a handout. The US has no lack of such people. Can't say that about many other countries.

That depends on them not dying of course, which is the one thing the government should be meddling in but it isn't. Go figure...

[Cnut237]

What I'm hoping is that these numbers temporarily reflect the consequence of the COVID-19 shutdown and that the contraction eases in the upcoming quarters as people start getting back to work.

It is difficult to predict, as obviously the economic effects of an event can be felt long afterwards. We also have to consider whether there might be any partial or localised lockdowns in the future as the number of new cases remains high. Also, easing of lockdown and people returning to work might just mean that the damage stops getting worse. In the US this is complicated by the upcoming election. You might imagine that Trump will do anything he can to prop up the economy and make it look good in the short-term, with the longer-term effects of this only being felt after the election.

the odd thing is that I'm not seeing a lot of people around in the stores and such.  I'm assuming that might be because people are getting stuff delivered from Amazon and the like. 

Same here in the UK. Lockdown is over, but city centres and out-of-town retail parks are still extremely quiet. Some businesses remain temporarily closed, some have closed permanently. People are allowed to go out, but aren't. The government is giving people 50% off prices for eating out on certain days - but the restaurants still look fairly empty. People know that the virus is still out there. The economy here will not recover any time soon.

Yes, I suspect that as everywhere else, there has been a surge in online orders. But this works disproportionately in favour of Amazon etc.; bricks-and-mortar businesses still suffer. And this effect is amplified by the fact that office workers are still working from home. Businesses that rely on city centre foot traffic will find it difficult to survive.

Finally, each day brings new newspaper headlines of some big multinational company shedding huge numbers of jobs. Partly from necessity, no doubt, but also I'd imagine to an extent many are using CV19 as an excuse to make huge 'efficiency' savings to reduce headcount for the benefit of shareholders.

Crisis always accelerates change, and this is a major crisis. Working patterns and online retail may have changed forever.

[jaysabi]

WOW.  32.9% is no joke, and that's scary to me.  

What I'm hoping is that these numbers temporarily reflect the consequence of the COVID-19 shutdown and that the contraction eases in the upcoming quarters as people start getting back to work.  I also do think that's going to be the case, because I'm seeing my local stores and restaurants reopening--the odd thing is that I'm not seeing a lot of people around in the stores and such.  I'm assuming that might be because people are getting stuff delivered from Amazon and the like.  

So that's the US.  I'm curious as to how the rest of the world is faring in terms of their economies.  

There are still some establishments who are closed permanently or temporarily.

That's true, although I haven't seen many in my area that have closed up shop for good.  But keep in mind that I don't own a car and I generally don't travel too far from home.

The 32.9% drop is actually the annualized rate.  The drop was only 9.5% year over year, and was extrapolated to get the annualized rate, which really doesn't make sense and is a bit of reckless reporting considering the strict shutdown conditions that existed in the second quarter will not exist for the full year and so we are not going to see a full 33% drop in annual GDP.  But the bigger number gets more clicks.  The silver lining is that things aren't actually as bad as was reported.

GDP swings are typically reported at an annual rate — as if they were to continue for a full year — which can be misleading in a volatile period like this. The overall economy in the second quarter was 9.5% smaller than during the same period a year ago.

Source: https://www.npr.org/sections/coronavirus-live-updates/2020/07/30/896714437/3-months-of-hell-u-s-economys-worst-quarter-ever

[stompix]

Same here in the UK. Lockdown is over, but city centres and out-of-town retail parks are still extremely quiet. Some businesses remain temporarily closed, some have closed permanently. People are allowed to go out, but aren't.

Maybe because everyone is flocking to Dorset? From a few images I saw in the news seems like a bigger crowd than at the landing of Cnut the Great   
But yeah, I think there should be a sizeable decline everywhere, and the bigger and livelier the city the worse the decline, I would say that we're at about 80% overall activity in city center, but here in CE, we have managed to get away with fewer cases and victims that the western part of the continent.

Crisis always accelerates change, and this is a major crisis. Working patterns and online retail may have changed forever.

I expect the office/business rental to take a solid hit in the next period and then all that depends on it, coffee places and restaurants that fought so hard for a place near those will be the second wave of victims, that if they somehow managed to survive till now.
If this goes on for another year there will also be shifts in rent in house pricings, and god knows what those will trigger for some cities. A revival of the rural areas? Would be interesting.

The 32.9% drop is actually the annualized rate.  The drop was only 9.5% year over year, and was extrapolated to get the annualized rate, which really doesn't make sense and is a bit of reckless reporting considering the strict shutdown conditions that existed in the second quarter will not exist for the full year and so we are not going to see a full 33% drop in annual GDP.  But the bigger number gets more clicks.  The silver lining is that things aren't actually as bad as was reported.

News have become a serious business, you have to put more emphasis on marketing than selling actual products and nothing gets more views and rating that big numbers, just wait for the next quarter and they will forget how they reported this decline and switch to another model that would produce some clickbaitish results. A 9.5% decline is on par with Germany if I remember correctly their numbers, and even better than Italy Spain, which enforces my view, some countries in the EU will be hit worse longterm.

[AniviaBtc]

Definitely not this year and not sure until the next one. We all knew US is a strong country. But trump words is merely a promise which can be true or not. I dont know but their economy has depleted fast and it will attribute to Trump's actions regarding covid19 scenario. He did a poor piss job to prevent it.

In his statement before, "Make America Great Again", I really don't see improvements and equality in his term, even right now. All of his words are not put into actions, so I don't expect for the economy of US to suddenly bounce back after this pandemic ends. It is not that easy to recover from an economic crisis if the leader is not that responsible enough about its duties. Also the mindset of the President is really a must, he should know how to prioritize things so that economic recovery will not be delayed.

Maybe there is if the next President of US has a better solution. Their country is still one of the powerful in the world and only a great leader is needed to make it great again in spite of these worst scenario happening.

Most of the running Presidents in US do not look responsible enough for me. But what can we do if we didn't give them a chance to prove their duty in their territory. Overall, US is a good country and a well-developed country.

[Assface16678]

I don't think so that they can make large movements quickly because right now they are still suffering from the pandemic outbreak and we all know that they are one of the most populated countries. Today there are a lot of people lost their job because some of the companies and business don't want to operate and they want to avoid getting spreading of this virus immediately even this is a good thing but still one of the problem how does the economy brings back to normal if the virus is still spreading we need to wait for the COVID vaccine or resume all of the things to we can go back to normal and risk a large number of people that can possibly get infected.